A guide to McDonald's stock

McDonald's is the largest fast food company in the world. Headquartered in Oak Brook, IL, McDonald's (stock symbol MCD) has over 33,000 restaurants in 119 countries. The stock is like any bellwether, moving more or less with economic trends. As it expands abroad, especially in China, it is affected more by the world economy and less by U.S. business. The stock weathered the financial crisis well, and is now on an uptrend.

The company

History The company began as a single, small restaurant in San Bernardino, California in 1940 and has grown to employ about 1.5 million people worldwide today. Along the way, it has spun off well-known brands such as Boston Market and Chipotle Mexican Grill. McDonald's Competitors McDonald's' closest competitor is Burger King. Since the latter is a private company, there is no financial information available. Yum Brands (ticker symbol YUM), owner of Kentucky Fried Chicken, is a publicly traded competitor. Especially in China where YUM is competing for McDonald's market share.

McDonald's stock

Earnings and revenues With a revenue and earnings growth in the 10% range, McDonald's is growing modestly. The increase in earnings and revenues are average for the industry. Price/earnings ratio (p/e) With a forward p/e of 15, McDonald's seems to be fairly priced for a company growing as it is. Dividend The dividend yield of 2.9% is good but not great for a company like this. Debt MCD's debt of about $10 billion, in excess of cash on hand, is a little higher than its competitor YUM as a percentage of revenues. Still, with an annual cash flow of over $6 billion, the debt is easily sustainable, and in today's low-interest-rate environment, it can even be considered as a healthy thing, as the borrowed money is being put to good use in expanding the company. Comparison with major competitor Compared to YUM, MCD appears to be a good value. It has a higher dividend, faster revenue and earnings growth, and a lower p/e. Short interest Since only 1.1% of the stock is sold short, apparently, very few investors think McDonald's stock price will decline significantly in the near future. Stock chart During the financial crisis of 2008-9, McDonald's stock price held up very well. Since then, the price has been on an uptrend along with the rest of the market. It continues to hold the 200 and 50 day moving averages, which technical analysts think is a bullish sign.